Foreclosures Demystified: What to Do in the Event of a Foreclosure

Month after month, your mortgage payments come in like clockwork and if you aren’t fiscally sound, this could lead to a foreclosure. If you fail to pay your mortgage more than three times or if your lender files for a Notice of Default (NOD), your home could be subject to foreclosure.

But just because your lender is foreclosing on your home, doesn’t mean that the game is over for you just yet. In Salt Lake City, Law Office of Davis & Jones, P.C. and other experts noted that you could prevent foreclosure by following these easy tips.

The First Wave

As soon as your lender decides to foreclose on your home, it is important to react quickly. Respond to the foreclosure notice sent through the mail or give your bank a call to find out what your options are.

Lenders are actually nicer than you think. Before your home even ends up in an auction, they will offer a variety of options to help work out your mortgage payments and get back on track.

Whatever you do, do not ignore the problem. The further you fall behind mortgage payments, the harder it will be for you to stop foreclosure. Once this reaches the court of law, saying that you failed to check the mail would not be a valid reason.

Other Solutions

There are other ways to curb foreclosure if the situation calls for it. They may be unpleasant, but desperate times call for desperate measures. One such measure is bankruptcy.

When you file for bankruptcy, federal law prohibits debt collectors from continuing to collect from you — and this includes your mortgage lender. Bankruptcy does not absolve you from debt. It simply gives you more time to dig yourself out of that financial hole.

A deed in lieu is also another option worth considering. This simply means that you, the homeowner facing foreclosure, sign the deed of your home back to the bank voluntarily.

While a deed in lieu seems like the more viable option, this puts both the lender and your credit at risk. Banks are reluctant to take a home through a deed in lieu of foreclosing because this opens them up to lawsuits. As a result, this means that a deed in lieu is only granted when foreclosure is imminent.

Prevention is always better than cure, especially with mortgages. Be on time with your mortgage payments and keep a watchful eye on your bank account so you won’t have to worry about the options mentioned above.